Homeowners insurance affords financial safeguards in case your home or your belongings are damaged. It also affords protection if you are found at fault for injuries sustained by others while on your property and any damage that may be done to their property. Homeowner’s insurance is a requirement before you can be approved for a mortgage. There are various types of policies that range from the basic policy to those that afford a more secure safeguard of your property and belongings. Homeowners insurance is typically divided into categories. Each category sets forth what is covered and not covered by your plan.
Your home falls under the dwelling category. If your home is damaged in the event of a fire, your homeowners insurance will pay for the repairs and in some cases will pay for your home to be rebuilt. It’s imperative to have enough insurance coverage to cover the cost of rebuilding.
Any other structures on your property will be covered under the other structures category. These can be a shed, cottage, fence or detached garage that are detached from the home, or connected by a fence or other type of connection, but are not fixed to the home.
Another category is personal property, this includes the contents of your home. It is important to remember that not all personal property is covered. Under personal property your furniture, appliances and clothing are all covered, however money, jewelry and firearms are not covered. Personal property coverage provides financial compensation for the personal items in your home that may be have been destroyed.
Some homeowner’s insurance coverage has what is known as loss of use coverage. This covers you due to a covered catastrophe which makes your dwelling uninhabitable. The loss of use coverage pays for your housing and living expenses in the event you need to temporarily move out of your home until renovations have been completed.
Liability insurance provides defense costs and provides protection of your assets in the event of a lawsuit. This type coverage protects you in case someone falls on your property or is injured by your pet. There are additional homeowners insurance coverages you can add to your policy to help meet your needs.
Depending upon the type of policy coverage you choose, your settlement of that loss can vary. Most often settlements are based on the replacement cost, repair cost, or appraised value not on the market value or tax assessment value. Replacement cost is the amount to replace the damaged property, without depreciation. Actual cash value or appraised value is the amount to replace the damaged property minus the depreciated value.
When choosing homeowners insurance coverage you may want to look closely at package policies. These provide coverage for different catastrophes such as fire and leaks, plus they offer extended coverage for hail, windstorms, and vandalism. Some policies need additional coverage for perils such as earthquakes or floods, these provide coverage for specific weather events that are excluded in package policies. You should always verify what is covered in your specific policy.